Growth Strategies: Stopping Conveyor-Belt Medicine

Stephen Glasser, MD, was burned out and fed up. Then he found salvation.

He had a roster of more than 4,500 patients at his eight-physician practice in Maryland. He had no time to practice medicine the way he believes it should be practiced. “It got overwhelming,” he says. “I was frustrated. The endless supply of referrals, approvals, denials, and additional paperwork made everyone in my office unhappy.”

Then he discovered a new form of practice alternatively labeled “concierge,” “retainer-based,” or “fee-based” medicine. Whatever it’s called, he says this new business model “saved” him. “I could not go on practicing the way I was,” says Glasser, who has been a primary-care provider for more than 30 years, the last three of which have been as a retainer-based physician.

Glasser’s frustration with conventional primary care is hardly uncommon. And neither was his response. Physicians across the country describe themselves as frustrated, overwhelmed, and helpless in the face of a managed care environment they perceive as robbing them of the very reason they chose to practice medicine to begin with - to provide quality patient care.

That’s why many physicians are seeking alternative models that allow them to spend more time with patients, delivering personalized care that can enhance both patient outcomes and physicians’ job satisfaction.

The model Glasser chose - like most of its practitioners, he prefers the term “retainer-based” to “concierge,” describing the latter as “someone who tells you where to go in a hotel” - requires patients to pay a membership fee in exchange for additional services. The fees vary broadly, as do the types of services they cover. Medicare and most private payers forbid practices from charging patients for covered medical services, but not for extras such as e-mail and telephone access to physicians, house calls, online services, same-day appointments, and longer-than-typical office visits.

Last year, in the first objective study of this practice model, the U.S. Government Accountability Office (GAO) confirmed that the fees retainer-based practices charge are acceptable as long as they’re not applied to covered services, which amounts to double-billing. Its report, “Concierge Care Characteristics and Considerations for Medicare,” also noted that:

• Virtually all concierge practices are primary care.

• Annual membership fees range from $60 to $15,000 a year; roughly half of such practices report charging patients $1,500 to $2,000 annually.

• Seventy-six percent of concierge practices participate in Medicare.

• There were 10 times as many physicians in concierge practices in 2004 as there were in 2000, although the total known number remains small.

• Concierge practices are concentrated in major urban areas on the East and West Coasts, specifically Boston, Philadelphia, Washington, Miami, and Seattle.

Starting your own fee-based practice

Most physicians who practice retainer-based medicine say that transitioning to this model is tricky at best, and must be undertaken with a great deal of forethought. Physicians with experience and a good reputation with their patients - along with an orientation toward customer service and an entrepreneurial spirit - are best suited to make the transition.

Yet such physicians - those who have been practicing for a long time and have an established and loyal patient base - can face a very difficult transition for precisely those reasons.

That’s what Glasser discovered when he affiliated his practice with MDVIP, a Boca Raton, Fla.-based company that helps physicians nationwide establish concierge-type practices.

Glasser calls the transition the “toughest part of the process,” particularly when patients with whom he had long-established relationships told him they could not afford his retainer.

“Doctors complain that they cannot practice under the current model any longer, but they also can’t imagine getting rid of their patients,” he says. “I recommend holding ‘town meetings’ for physicians who are thinking of transitioning. I did this six times with my patients. I explained to them why I was making this transition. … It is our obligation as doctors to transfer patients who opt out of the new model. One patient was very angry with me; she thought I was deserting her. I had been seeing her for 20 years. That was very hard.”

Garrison Bliss, MD, president of the Society for Innovative Practice Design, whose members include practices that are adopting “innovative” practice models, agrees that physicians transitioning to a retainer-based practice should expect many of their patients to go elsewhere for care. But considering that the average primary care physician has roughly 2,500 patients, Bliss says those departures are necessary for the model to work.

Bliss warns that concierge care is not for all physicians, and he recommends that those interested in transferring to this business model do their homework thoroughly. “We recommend that physicians really think about it before they commit to entering this arena,” he says. “They have to recognize that they will be entering into direct competition with other physicians. They have to ensure that their pricing is known and transparent regarding what exactly their charges cover. There is also a large financial risk. If the pricing is too high or the services provided are substandard, they stand to lose a lot. However, for entrepreneurial physicians, it is a very appealing model.”

Regarding the question of what to charge for their services, Bliss says physicians should decide how many patients they can reasonably handle in a single day and then ask themselves: “What’s the lowest price we can charge and still provide optimum care to our patients?”

He recommends researching what other concierge practices are charging their patients. Although there may not be much of a market to analyze at present - Bliss estimates that there are roughly 300 concierge physicians in the U.S.; the GAO could find only 146 two years ago - he also expects that number to double in a year or two. “The growth rate is very substantial,” he affirms. “I expect this will be a huge movement.”

Glasser adds that physicians making this transition should prepare themselves for a “lean period” of several months at the very least. Many patients will leave your practice, you will be reducing staff, and you will be unsure if enough patients will want to join your new practice, says Glasser.

But despite these difficulties, he says it was worth it.

“I was looking for a way to provide my patients more personalized care, and I found it. I can now give my patients the time they need. … Today the staff at my office is happy to be at work, and they are welcoming to my patients.”

Patients benefit

Glasser explains that the “VIP” part of MDVIP stands for “value in prevention,” and he says that prevention is what MDVIP emphasizes most.

“The thrust in this medical model is on delivering uncovered services,” says Glasser. “At MDVIP, we give each patient a two-hour extensive physical exam when they join, which involves a very detailed medical history, extensive lab tests, and visual, hearing, and pulmonary screening. … We provide a health-risk assessment, in which we ask about sleeping patterns, diet, and exercise. This helps us determine whether patients are at a higher risk for particular diseases. We can then intervene early. … By attacking risk factors before they have serious consequences, we can best treat our patients, and that is the principal element of this medical model.”

After their physicals, patients receive small, portable CDs containing their medical records that they can carry with them, which can be a great convenience when seeing multiple specialists and a lifesaver if they end up in the ER. Glasser adds that he maintains a paperless office, adding further to the time he and his staff can dedicate to patient care.

At MDVIP, the typical physician has 600 patients. Glasser sees eight to 10 per day. “That means there is always room in my schedule for acute visits should they be necessary,” he says. “I am on call 24/7 unless I am out of town. Even then I still take my beeper with me. I know my patients when they call. I know their history, their meds, their problems. … It’s like it was when I started practicing 30 years ago. It’s the way medicine used to be. I even make house calls. I now have time to practice old-style, the Marcus Welby way. I know the entire families of those I treat.”

And the price tag for Dr. Welby’s personalized care? Patients are charged $1,500 per year, a third of which goes to MDVIP, which provides the legal backing their physicians need. MDVIP’s lawyers examine all of Glasser’s payer contracts in advance of him signing them. It also advises him on what he can and cannot bill for regarding his Medicare patients. Glasser adds that he ultimately maintains control over his practice.

Like Bliss, Glasser agrees that this model is not right for every physician. MDVIP, which now has 110 physicians in 15 states, is very selective about the physicians it recruits. “Not all doctors can do this; you have to be very devoted to practicing medicine,” he says. “MDVIP does a very careful analysis of your practice if you express interest in joining them. Based on that, they turn many physicians away; they turn down nine in 10 of the physicians who approach them.”

As for the charge that he is practicing an elitist form of medicine that further contributes to the growing healthcare disparity between the haves and have-nots, Glasser responds that his patients range from high-paid professionals to bus drivers. “This model is for everybody and anybody. It’s not an elitist forum. It’s a little extra fee for a lot of extra service,” he says.

It all started in Seattle …

Most observers of concierge medicine trace its origins to a practice called MD2 (or MD Squared), established by two physicians in Seattle in 1996.

Physicians Howard Maron and Scott Hall created the business model to reflect their vision of elite healthcare. MD2 is generally believed to be the most expensive of concierge practices, charging up to $20,000 per year for spa-like surroundings and house calls on demand. Its menu of services strives to combine luxury and healthcare on a scale comparable to what one may expect from a stay at the Ritz Carlton.

When it started, many patients and physicians recoiled in horror at the prospect of an elite few being able to purchase superior healthcare access in an increasingly belt-tightening national healthcare environment.

But practices like MD2 are more the exception than the rule. Rather than providing lavish services in exchange for exorbitant fees, the bulk of concierge practices charge patients more modest amounts to cover nonbillable services they cannot recoup from payers, or to offer longer office visits, which are virtually impossible under managed care. By and large, these physicians attribute the rise of this business model to their frustration with - if not outright revolt against - a managed care system that forces them to see 30 patients or more per day while handling multiple complex payer regulations that drive their staff mad.

“While one may not like the idea of fee-based practices, they represent responses to healthcare’s core problems - they are not the problem itself,” says primary care physician Charles Kilo, CEO of GreenField Health, a practice in Portland, Ore., that charges patients annual fees ranging from $256 to $495. The fee covers extras such as e-mail and telephone access to physicians, extended office visits, and same-day appointments.

Kilo, though, says his practice is different than most fee-based practices because he invests a portion of the profits he realizes from patient fees to fund research into the use of information technology to improve healthcare delivery nationally.

“We could not do all that we wanted to do on the research front with the traditional primary care reimbursement, so we decided on the annual fee to help support our work,” Kilo explains. “Thus, our intent, our purpose, is fundamentally different from most practices that charge an annual fee. Fortunately for GreenField, most national healthcare leaders also see us differently because of the work that we do, and the reasons that we do it. We also dedicate about 5 percent to 10 percent of the practice to those on Medicaid, which also differentiates us from the average concierge practice.”

Kilo goes out of his way to differentiate GreenField from traditional fee-based practices, which he perceives as conceived principally for the convenience of the wealthy and the enrichment of the physicians who serve them. “In concierge medicine, the most pervasive attitude I see is doctors saying, ‘We’re tired of dealing with the impossible and ever-changing system of financial reimbursement for patient services. So we’re going to treat those patients who can pay out-of-pocket for our services, and we will enjoy a higher standard of living in the process.’

“At GreenField, we don’t want to escape the current problems within the healthcare system; rather, we want to face them head-on by utilizing a practice model that permits us to fund research that allows us to explore ways of changing the system for the better. … I don’t think that there is anything wrong with offering concierge medicine to patients, but in the end, it is not helping anyone in the larger picture of things. It is not helping the industry that we are struggling to perpetuate.”

Barbara A. Gabriel, MA, is the managing editor of Physicians Practice. She can be reached at bgabriel@physicianspractice.com.

This article originally appeared in the May 2006 issue of Physicians Practice.